McRae made the call on Hill before Collingwood fine-tuned preparations for Saturday's twilight clash at the MCG, and had better news for key forward Brody Mihocek, who has been battling a toe injury.
There was also reason for Jeremy Howe to smile, recalled to the side after overcoming an adductor issue.
Young Will Parker had to make way for Howe, but was named as a possible emergency, alongside forward Dan McStay and veteran Will Hoskin-Elliott, who is retiring at the end of the season.
Hill has made just one AFL appearance - as a substitute - in the past three months due to personal reasons.
The 2023 Norm Smith Medallist had ramped up his training in a bid to feature at the pointy end of the season, but so far has fallen short.
"Bobby won't play this weekend," McRae said of the exciting small forward.
"It was really difficult - I told him before training ... it was a conversation that was hard for him to hear, but it was a reality of right now with his preparation, and credit to him he trained really, really well, which shows how far he's come in the last little period.
"He's working hard to get back and this is not permanent, but this week he's not available."
McRae said the decision was "based on a lot of little things" both with 25-year-old Hill and the team, and did not rule him out of playing if the Magpies make the grand final.
"I'd like to think so, I don't want to take away hope for the young lad, and he's progressing towards that," the 2023 premiership coach said.
"I mentioned that to him - keep training well, keep turning up, keep being here, being present, keep getting better every day as we always say.
"There may be a world where that could be true."
While Hill was a tough call, the decision on Mihocek was an easy one for the coach.
"It's hard to keep him out of the team, even the training track, he's out there training really well this week and he's fit and well," McRae said.
Howe was given the green light to play after the match committee viewed high-performance figures to assess  the defender's progress after being unable to play a full game since round 16.
He trained fully on Thursday and was recalled to face the Lions, with the high-flying Magpie bringing 270 games of AFL experience to the team.
